Berger Paints India Limited (509480) Q3 FY2026 Earnings Call Transcript & Summary

Hello. Good evening, everyone. This is Nitin Gupta from Emkay Global. I would like to welcome all to the Berger Paints India Limited's Q3 FY'26 Results Conference Call. I thank Berger Paints management for allowing us to host. We have with us today, Mr. Abhijit Roy, Managing Director and CEO; Mr. Kaushik Ghosh, CFO; Mr. Sujyoti Mukherjee, Vice President Finance and Accounts; and Sayantan Sarkar, GM, Finance and Accounts. I shall now hand over the call to the management for the opening remarks, post which we will proceed with the Q&A Session. Over to you sir.

Thank you, Nitin. And good evening to all of you. With me today here is Kaushik, and Sayantan is on the line in Kolkata. Let me start with the presentation. We have just quick highlights of the quarter 3 performance. High single-digit volume growth, while value growth remains muted. Extended monsoon spillover into October impacted demand momentum. Year-on-year and quarter-on-quarter expansion of gross margin backed by improved product mix and stable raw material prices. And PBDIT margin is within the guided range of 15% to 17%. Stand-alone, if you look at the performance, 8.5% volume growth. The value growth relatively much more muted at 0.4%. Value-volume gap driven by mix shift, higher share of economy emulsions, textures, and tile adhesives, coupled with price corrections taken in financial year '25 in the economy emulsion segment. The 2 together had that impact of volume growth being relatively stable, but value growth being at 0.4%. Automotive segment delivered steady quarterly performance, while Protective, including GI, remains muted. If you look at the volume and value CAGR of quarter 3 and 9 months, if you focus on the 9-month figures, it's an interesting figure that you will see that in the volume growth for 2 years, 3 years, 4 years, 5 years, whichever you look at it, 5 years, of course, is at 13.9%. But in the 2, 3, and 4 years, it's been hovering in that 8% to 10.7% range. So it's nearly that high single-digit to double-digit type of volume growth. But value growth correspondingly is progressively reducing from 13.4% to 8% to 2.8% to 1%. Now the questions can be asked as to why 4 years and 5 years, the gap were much lesser and why has it been increasing when you look at the 3-year, 2-year or the current quarter? There are 2 major reasons for it. One is the fact that there was this price drop, which happened to the extent of about 4.5%, 5%, which created this gap for 2 years consecutive. And then subsequently, there was this price drop which happened in the case of economy emulsions, which was about 2%, 2.5%, which is still persisting up to December, January 23, it was there, and no longer there after that. The second reason is the improved sale of certain high-volume, low-value products like textures, tile adhesives, the growth rates of which are much, much higher than paint. So therefore, the volume growth happens to be there, but the value growth is relatively muted in such a case, though the profitability, as you can see from the gross margin, remains at a healthy level. If you look at the gross margin figures, in fact, this quarter, it has been the highest in the last 15-odd quarters, barring quarter 4 of last year, which was matched at 41.2%. This quarter 2, it is at 41.2%. At the EBITDA level, of course, it is at 16.1%, largely because of the scale effect. The value sales growth did not happen, so obviously, the overheads got spread over a lesser value. Otherwise, the EBITDA also would have been more closer to 17%, but it's showing a 16.1% here, but well within the range of the 15% to 17% guidance that we have given all through. Stand-alone quarter 3 results, if you look at, therefore, total income from operations increase of 0.4%, gross margin 4% expansion. EBITDA margin flattish at minus 0.1% and PAT, of course, is minus 2.5%. YTD basis, it is 1.2%, gross margin expansion of 2.5%, PBDIT minus 4.4%, and PAT at minus 8.8%. Similarly, consolidated is very similar to stand-alone at 0.3% in terms of top line and minus 0.2% in terms of bottom line. And on a Y-T-D basis, it is at 1.9% value growth and minus 5.4% in terms of EBITDA growth. Decorative business, the dealer network expansion continued during the quarter, driven by installation of 2,500-plus color bank machines which is what we had indicated that we will possibly do and enhancing presence through addition of stores. And currently, the store numbers are in excess of 1,800 stores across the country. Store-led urban initiatives undertaken in prior quarters are on track, resulting in positive traction with momentum expected to sustain. Newly launched emulsion Kolor Plus, and metallic enamel and metallic water-based paint launched very recently performed well. Construction Chemicals delivered robust growth driven by differentiated offerings such as roof segment, damp-proofing solutions supported by the successful launch of DampShield and strong traction in the Tile Adhesives segment. Strong double-digit and volume growth registered in Wood Coatings segment. These are some of the products which we introduced. The Kolor Plus is an interior premium emulsion, doing quite well in the markets where we have launched so far. Silk Metallics is a new one which we introduced more towards the end of December, doing very well in most markets. Already in January, we clocked a healthy sale. February also has been started. And now I think we expect that the metallics of Luxol Metallics and Silk Metallics, these are high profit margin products and doing quite well across the country. The other is in terms of the expanding range of construction chemical products and waterproofing range. We added DampShield, which is another product which we added in the last quarter. And we are going to add 1 or 2 new products this quarter as well. Industrial business, auto segment delivered high single volume growth [Technical Difficulty] Protecton and General Industries, growth in terms of volume and value remained muted. These are some of the photographs of the stores that we are setting up in various markets. Net cash position consolidated has improved from about INR 689 crores in March '25 to INR 918 crores in December '26. Consol performance Bolix, strong top line and operating profit growth, partly aided by P&L appreciation. BJN-Nepal, muted revenue and profitability amid political disruption, but things are stabilizing there. STP Limited, top line impacted by temporary shutdown at Jamshedpur plant, operations normalized from January '26. So now it's okay. SBL Specialty Coatings Limited, revenue impacted by weak industrial demand and tariff impact, profitability affected by scale and one-off start-up costs. We set up a new factory near Chandigarh, which consumed some initial expenses, but it is one-off and should come off from this quarter. Berger Becker Coatings, robust sales and profitability driven by scale and margin expansion. And Berger Nippon Paint Automotive Coatings strong double-digit revenue growth aligned with buoyant demand in auto space. Profitability also strong double-digit growth, improved actually and aided by stable raw material prices as well. ESG excellence at Berger Paints with a score of 64 across ESG parameters given by NSE. Score is a leader amongst the peers within India in the paint domain. Our corporate office was LEED Platinum certified. We got the certificate in last month, December 2025. Business outlook, demand conditions continue to be closely monitored with early signs of gradual improvement. So October was negative, November slightly positive, December more positive, January slightly more positive than December, so it's improving month-on-month. Focus remains on revenue growth with sustained gross margins remaining the key objective. Operating margins are expected to remain within the guided range. Competitive intensity expected to remain elevated. Continued investments in branding, distribution expansion and urban initiatives remain key to capture potential demand improvement as and when it keeps happening. Geopolitical uncertainty, Forex volatility, and evolving tariff dynamics may pose near- to medium-term volatility. Thank you and open to questions.

So we will now start with Q&A Session. I hand over the call to my colleague, Mohit Dodeja moderate the question-and-answer session. Over to you, Mohit.

[Operator Instructions] The first question is from the line of Mihir Shah. [Operator Instructions]

Sir, I wanted to check with you, if you strip off the month of October from the results, how is the sales growth momentum for November and December? And any insights you can share on how that continuity is happening in Jan as well? You did mention that the EBITDA margin would have been closer to 17% if the impact wasn't there. Some insights on the sales growth momentum would be helpful, sir.

Yes. So as I had mentioned, October was negative and which I had indicated in the last time we met here with all of you. November did have a slight positive and then December was better than that in mid-single-digit type of growth rate. And that is where we are in January as well. So that is how it is. In terms of value. In terms of volume, obviously, that differential still exists of about 6% to 7%.

Understood. Sir, any insights on the competitive landscape that you can share? It remains stable the way it was, is some deceleration or now gradually the other players were kind of getting stagnated. Any insights on how the intensity is shifting on the competitive front, please?

It remains very stable now. More or less, the main player remains at a stable point now in terms of competitive intensity. It's not increasing, it's not decreasing, it is at a stable level. Month-on-month, we see the values remaining very similar to that category. And on a quarterly basis, if you look at it, there is no major gains happening. Yes, there is a slight gain, but not like they were growing at, say, 35%, 40%, now it's 7%, 8%, 10%, 12% type of a gain.

In light of all these, how do you see the next year shaping, because now we have at least 2 years of lower value growth in the base and there are most of the tailwinds around the macro parameters already there? Can one expect any improvement in volumes to go to mid-teens levels in next year and then you can go back to double-digit growth in value terms over the next year, sir?

So I think the double-digit volume growth should happen, and it is already very close to it. We should be able to definitely go into the double-digit volume growth happening. As far as value growths are concerned, I think, the differential will remain in the extent of 4% to 5%. So if the volume growth goes up to, say, 12%, 13%, then the value growth should be in the range of 7%, 8%. That's where, I think, it should be. And that's, I think, realistic as of today.

The next question is from the line of Sucrit Patil.

My name is Sucrit Patil from Eyesight Fintrade Private Limited. Am I audible?

Yes, you are.

s My first question to Mr. Roy, as the decorative paints market continues to evolve, how is the management thinking about prioritizing growth levers such as distribution reach and product innovation? Among this, which do you believe will be most critical in strengthening Berger Paints' competitive positioning and sustaining long-term brand leadership? That's my first question. I'll ask my second question after this.

Right. Thank you. I think both are important and very important for the decorative business and specifically for us. We, as you know, are a #2 player, but we have many areas in the country where we have a relatively weak presence in terms of distribution network. We have been ramping up this network at a curious pace in the last, I would say, 3, 4 quarters. The results will take some time to become completely visible, but it should start showing very soon, because it takes time for a machine to start off, and establish itself, and you get some sales and the mass builds up. That's going to happen, and that is something which we -- and that drive will continue from our side. There are still many areas of the country where there are gaps in terms of availability of material which we are now trying to bridge by adding more manpower on the ground and at the same time, concentrating on improving our distribution. So that's one area which we will continue to lay stress on. The second is in terms of the product innovations, which you mentioned. We did mention 2 or 3 products, which we have recently launched, 1, 2 more in the pipeline, very interesting ones. And I think we will continue to do that for 2 reasons. One, of course, this channel that we are developing and increasing in size, we already have a fairly large number of machines on the ground, and we are adding this. So to these counters, we add these innovative products. So that improves the sale. The second is, of course, the profitability moves up. So these are all products with higher margin also normally. And therefore, it tends to boost the profitability as well. So we will continue to do both of these simultaneously.

My second question to Mr. Ghosh is from a financial point of view, can you elaborate on the key trade-offs managed between input cost volatility, pricing discipline and continued investment in brand and distribution. How do these considerations influence your approach to sustaining cash generation and return metrics across the cycles? Just want to understand your point of view on this. And how do you approach this?

So basically, brand building has always been our priority. And when it comes to margin maintenance, that's also a very big priority for us. Whenever it comes to maintaining the cost ratios, we continue to monitor them on a regular basis. So there is this constant innovations and the coordination with materials and cost efficacy, which we continuously monitor.

The next question is from the line of Aditya Bhartia.

Sir, my first question is on the insights on demand momentum that you shared. In the last conference call, we sounded a lot more optimistic about demand. We were speaking about possibly mid-single-digit kind of revenue growth in third quarter, touching close to double-digit kind of revenue growth towards fourth quarter. This time around, it has changed a bit and not only for you, but for the entire sector. Just want to understand how are things changing at the ground? Why is the same optimism that was there last time around not there? That's my first question. And my second question is on RM costs. Is there any progress that has been made on anti-dumping duty on TiO2?

Very valid question that you asked. I was also optimistic about being more closer to 6%, 7% in terms of the growth and possibly going towards the 8%, 9% mark by the fourth quarter. That was the expectation that once the rain stopped, the demand will pick up. It did pick up, but not to the extent that we would have loved to see. Possibly also that while the rains, which was elongated quite a lot, we kept pumping material into the dealer shelves. So there was some amount of stock buildup, which happened, which got liquidated in the period between November and January. So therefore, the replenishment sale did not happen to the extent that we would have loved to see there. Possibly, it will start seeing improvement in terms of the actual growth situation. February, March, progressively, it should stabilize. This is to answer your first question. You asked another question. What was the second you asked?

Sir, on anti-dumping duty on TiO2.

Anti-dumping duty, yes, we did fight this case and we won this battle in the court. And the court has given a judgment that it needs to be given back. So we've got part of the money back. The other part we have applied for, and we should get back that money also in form of the anti-dumping. As of now, there is no anti-dumping duty on titanium dioxide. Until that point of time, therefore, the cost has come down for titanium dioxide marginally.

Sure, sir. Just a clarification. Is this a final order from the court? Or is it the stay that they had put...

No, it's a final order which was given. So that's why the government had to refund the anti-dumping duty from the date when that order was given.

The next question is from the line of Karthik Chellappa.

Sir, 2 questions from my side. The first is, if we were to look at this value volume gap of about 8% and if I were to bifurcate it between, let's say, mix level changes where the economy segment probably did better as well as, let's say, the price revisions that we have undertaken, which are yet to probably anniversarize, how will that split look roughly in your opinion?

So the mix change will probably be about 3%, 3.5% on account of the low-value, high-volume products selling much more than other products. About 2% to 2.5% were on account of direct price drops, which were there, which we took in the low-end emulsions last year, which is still impacting. As I said, till January, this impact was there, from February onwards, that weans off. The third part which was there is we increased our spends in the painter spends, which was there in reaction to the competition which is there. And therefore, that's about 1.5-odd percentage, which has gone up. So all put together, this gap is explained.

So sir, in a way, going forward, to your comment on the value volume gap will still remain 4%, 5%, even as volume goes to double digit. So inherently, you are making the assumption that the mix changes is something that will continue, isn't it? Because...

That's priced.

Yes, the priced will anniversarize at some point and the...

That should rise.

Okay. Why do you think that is the case? Why do you think that...

Because the growth of these categories is much higher. It's starting from a low base as of now, and the market is quite big. We have just started and therefore the growth rate for us, the trajectory of growth is much, much higher. And hence, this is going to continue for the next possibly one year, 1.5 years, 2 years maybe, after which it will obviously start metering down.

My last question, sir, is I think this quarter as well as probably the previous quarter, the market leader has probably done slightly better than us. And in the past, we used to have commentary or slides on our market share gains, and that was not there this quarter. What would you attribute, let's say, the slowness in our market share gain?

So even today, we have lost a little bit of market share. In fact, market leader has also lost market share. It has gone mostly to Birla, if you take Birla also into one of the categories, given the fact that whatever they say, we assume that they are saying that this is what they have done. If you consider that, then there is a slight gain in market share for them and losses for everyone else in the system. The reason for the slightly lower growth that you are seeing for us compared to the competitors is because competitor leader you are talking about had a very low base in the third quarter and the fourth quarter of last year as well, second, third, and fourth quarter. The differential was very high. In fact, the gap between us and them in the fourth quarter was 9.5%. So they stand at an advantage of 9.5% starting. So obviously, I would expect that the growth rates will be higher in their case compared to us. So that is what it is, but we are still holding on to fairly decent, we didn't lose any market share last year at all. This year, there is a marginal decrease, but we are still there doing fairly, okay, I would say, given the current situation.

The next question is from the line of [ Tejash ].

Sir, first question pertains to your observation or your comment that you made that the competition from the big challenger has plateaued. I just wanted your observation or comment on the broader competitive landscape as well. So there is a long tail of competition also which is joining the industry, be it the smaller fragmented players are also coming and then there is also consolidation, which is creating another large entity, which is JSW. And then we also picked up that Haisha also -- it's not a very sizable competition, but Haisha is also, from Pidilite, is also kind of entering East India. So when we zoom out and when we see it competitive landscape overall, not only from one new player, how would you read that?

So Tejash, listen, the other competitors that you spoke about, those type of competitors have been coming into this country and fighting for long years. Some of the MNCs used to keep coming in. Sometimes Hempel will come, sometimes Jotun will come, sometimes Sherwin come, sometimes other people will come. So they are there, but they are not very disruptive or takes away a large chunk of the business. So it is impacting, but to a lesser degree. I would say maybe all combined together, they will be again impacting the growth rate by 1%, 1.5%, but that's about it, right? But the bigger impact is coming from that one player, which is stabilizing. So I would place it in that way. The other players who are there are not very disruptive or not coming from zero base. They are there for now quite some time. The incremental gains that they are making is not substantial to disturb the equilibrium in the system.

Fair point, sir. Sir, second, just referring to earlier participant question that the industry at large gave very positive signals in the previous quarter and investors also kind of -- we want you to say a good thing, so we also kind of cheered it very happily. And then the same could not last for a quarter. So just wanted to understand what is the forecasting significance of some of this high-frequency monthly numbers? Or should we rather wait for at least 2 quarters before we say that the worst is behind? And then that, along with one broader question that if our bull case scenario is 7% value growth for us, 5% to 7% or you said mid-single digit. The Government of India is actually hoping for 10% nominal GDP growth rate. So now when I tie it up with low penetration of the category and we not even eyeing or targeting nominal GDP growth rate, where is the disconnect? Why this number and that number are not matching?

Yes. So why is this that we were relatively more, I would say, positive in our outlook. And why we are not saying that is largely because normally in the paint industry, we had seen in the past, that when rains happened or when there was a disturbance in the demand situation and it got broken for some time, like, say, COVID or like any other disturbance in the system and the paint demand was disrupted. When it came back, it came back, all the pent-up demand used to come back, and it used to be far more stronger demand once it came back. This time, when it did come back, it did not happen at the pace at which we had seen earlier. Now you might ask, why did it not happen? Why did it happen in the past? And why did it not happen now? It can be that, as I said, we were still playing the game. It was not completely disrupted. We were selling, we were still growing at a lower pace maybe, but we were still there, hanging on there. And therefore, there was a built-up demand in the system, which got liquidated in the next 2, 3 months. The second reason is that there is -- or there are other new players who have come into the system, which, again, we should have anticipated that is there still there. And that growth rate is still disturbing, right? To that extent, it did not bounce back fully. You can say that why are we not looking at a 10% nominal growth should result in at least a 10% growth for the industry. True, it should. Logically, that is how it should be. But given the current context that at which pace which we are growing, we want to be conservative and be very sure that what we are saying we should be able to deliver, and that's why we are saying that. It may so happen that we may actually grow at what you are saying as 10%, possibly next year. But we would like to be playing it safe. We don't want to say that we will grow at double digit and then land up with 4%, 5%.

And if I may squeeze in last one. Any pocket of demand, be it on product side or regional side, which is doing much better than the aggregate numbers that we are delivering?

Well, some of the products, as we have always said, construction chemical, waterproofing, wood coatings, some of our emulsions in the premium category are doing quite well, much better than the categories itself and overall growth rate of the company. And in some regions, some of the urban markets where we have invested, have started doing better than what we used to do and much better than the category growth rate.

The next question is from the line of Pratik Gothi.

This is Pratik Gothi from HSBC. Most of my questions have been answered. I want to push on a particular point you made regarding some downtrading to the economy segment from premium and luxury in general. Could you elaborate on that? Why do you see that is happening? Why do you think that is happening? This is my first question.

No, it's not really downtrading per se. The luxury category is not growing as much. Part of the reason can be that in our case, at least, much of the luxury category growth and the luxury base exists in the East for us. The East market hasn't done all that great in the last few months. And therefore, for us, luxury category has been a bit muted. The economy category, on the other hand, has been doing better. This is an upgrade actually from lower down distemper, et cetera, moving into emulsions. There has been a price cut which we have taken, which I mentioned about in the economy emulsion also. It is, therefore, much more price competitive and therefore, the demand and the volume growth has been higher in the economy side.

Sure. This helps. Since we're talking about regional presence as well, I remember that you also have a decent presence in Uttar Pradesh. I think it's above average in terms of national presence. So any regional trends from that particular state where the growth has been strong, at least the GDP growth, underlying growth has been strong there.

UP has been doing well for us. It continues to do well for us.

The next question is from the line of [ Rishi Mody ].

So first question I had was on the resin facility that you all have operationalized. Just wanted to get an understanding on how much gross margin -- how many bps gross margin expansion should come from this? And what do we intend to do with that margin accretion? Are we going to retain it, let it flow to the bottom line? Or we're going to use it somewhere in the P&L?

Well, not very significant, I would say, though it will have some impact. This is basically for solvent-based production, which we are going to start in Hindupur. We are expanding there in our southern plant. It is meant for industrial paint, also for decorative, more so for industrial and also a little bit for decorative paint. This was necessary because we were a bit stretched in the industrial side for capacity, and this will help us to actually be comfortable as far as production capacity is concerned on the industrial side, which is growing at a decent pace, especially the automotive has started picking up. At the same time, we expect protective and general industries also to pick up soon. And therefore, we wanted to have the capacity in place beforehand. So this is the reason why we have started off the resin manufacturing capacity. It will have some impact, but that will possibly be utilized by us in the market, it is quite intense in terms of competition, so possibly, we will have to spend a little bit more. Brand building efforts might require more money there. So therefore, that might go there.

Got it. Second question, I wanted to understand, you mentioned that you all will have a 4% to 5% gap on the value volume numbers. Asian Paints also mentioned the same thing. And the rationale given by both of you all is that non-paint products, which are lower ASP are growing faster and economy is growing faster than premium. For Asian, I can understand because a larger portion of their decor paints is premium paints. For us, it's kind of the reverse where we are more dominant in the economy and the exterior paint segment, and we are making our forays into the premium segment. So shouldn't ideally that gap be much lower for us? Or do you think the demand for premium is not there or we are missing something in that proposition and hence, our economy is still going to grow ahead of premium?

No, I explained that a few minutes back as to why this is happening. Our reasons are different, their reasons are quite different. As I said, we have our own reasons why the Eastern area did a little bit of underperformance for our own internal reasons, which we have corrected now. So therefore, that growth rate will be restored as far as the luxury emulsion is concerned. Premium emulsion, in our case, is doing quite well. It's the luxury, which is slightly below par. The economy emulsion, on the other hand, is growing because the category itself is growing. India is a vast country even for them and for us, whether we are present slightly more in terms of percentage, but they are also equally present there. Both of us are growing because the category is growing at a faster pace. So that's the reason why economy emulsion keeps doing better.

Got it. And sir, final question from my end. It's more on the capital allocation piece. Given that we'll be generating close to INR 1,400 crores, INR 1,500 crores of cash flow from operations over the next couple of years, what amount of that will be used for organic CapEx? And what do we plan to do with the remainder? And are we open to doing buybacks, given the current valuations instead of paying out dividends?

So we believe that it is a growing country, even though the growth rates have been a bit under the water for some time now, but we believe that things are going to change. As of now, we have plans for 2 factories: One in Panagarh and one in Orissa, both of which together is an investment of about INR 1,800 crores to INR 2,000 crores. So it will absorb the free cash flow that is there. We already have about INR 900-plus crores in our books. And as you said, about INR 1,400 crores might be generated in the next 2 years. So this will be consumed, a large part of it in the 2 new factories, which are going to get set up. Whatever leftover is there, well, we don't know. As of now, we keep looking at acquisition opportunities, but we don't look at very big stakes. We look at small stakes, which we can integrate with us either in terms of new technology or new geographies or new product lines, which can help us to grow at a faster pace.

Got it. No plans for buyback at this point in time?

No, not at this point in time.

The next question is from the line of Aniruddha Joshi.

Sir, while the market growth is slow, the onus to grow is on market leader and even Berger also. So what will be our initiatives to, in a way, drive growth of the market means what is really required like in terms of higher ad spends or higher ad spends of the premium products or in a way, a little bit price cuts, what can really drive the growth of the premium end of the market. And in a way, premiumization also should be driven from the corporate side as well. So reducing the gap between premium and economy products will that serve as the purpose? So what are the thoughts on these aspects? That is question number one. And then question number two, the new challenger player had indicated that its share of voice was more than 30%. And the share of voice of other players had declined materially. So has there been any change in that now? And has the share of voice for, especially Berger, has gone back to its share of market or probably higher than share of market also? Yes, that's it from my side.

So to answer your first question, Aniruddha, it is true that it's incumbent on the major players in the industry to try and shore up demand. There are 2 major things which can happen, which can help build up demand. You need to create excitement by generating new product ideas, new thoughts, something which is different and which the consumers want. And we keep looking at innovative product launches. We have been doing so for some time now. Many, many new products which we have introduced into the market, which later got copied in the industry, and we will continue to do so. In the near term, we just introduced 3 products actually, DampShield, Kolor Plus and the metallic range, all of which are in this premium, super-premium category and with good profit margin and at the same time, much in demand in the marketplace. And I think it should do well. So that's one part. The second, which you said -- what was the other question which you asked?

About share of voice.

Share of voice. So in terms of the advertisement that we do, we are on par with almost our market share. The player that you spoke about is much in excess of the market share that they hold. And that's their entry strategy. They don't have to worry about their profitability. We do. And we are very conscious about it, and we want to remain in the band which we have indicated. Our gross margins are to be protected. We can't operate at negative margins and all. So spending money is not something which anyone can do. If you have to be profitable, then you have to be careful in doing so.

Just last question from my side. You indicated loss of some market share. If you can elaborate a bit more on that, which region we would have lost East, West, North, South or rural, urban, metros -- which -- any color...

It's a minor share loss. We were at 19.5%, 19.6% it would have probably gone down to 19.4%. Overall, 0.2% loss across various markets. It's not as if we have dropped by 2% or something. So 0.1%, 0.2%, 0.3% here and there, some gains, some losses. It depends on the market. And some of it is manpower driven, our own changes which have happened. So there is no specific market I can point out where we are losing share.

The next question is from the line of Jaykumar Doshi.

Could you elaborate a little bit on your comment on competition is stabilizing, the new competition? So one is whether it is the dealer penetration, tinting activity or at dealer level market share that you may be tracking for some of your key dealers? Were you referring to the overall sales number, secondary sales? That is one. And second is, could you give us some color on how have you seen their trade schemes and rebates, whether that is also stabilizing or are they intensifying the effort there?

So the first question, our reading of the situation is that if you look at the month-on-month sales sort of the pressure that we used to feel, that's not increasing, right? So we do our tracking of our counters where they might be present or new counters where they might be getting in. That also does not indicate any sudden changes happening there in any of the markets. So I presume that it's very incremental changes which are happening, which is why I said things are relatively more stable. If you look at the overall scenario and when we do track the movements happening in our network, that is what we see that we haven't seen any great disruption happening or great changes happening in the network. And you will get to see that primary figures also, there will be an improvement sequentially. Quarter 2 was relatively muted for them and quarter 3 is a move up from that perspective. But month-on-month, it isn't shifting greatly. November and December would be possibly be at similar levels for them.

Understood. And trade schemes, rebates, any comment?

Trade schemes and rebates have been also very stable. In fact, these days announce some 3-month schemes and stuff like that. The variations are limited. There is aggression which continues. They are already, as you know, much lesser in terms of price compared to competition. They were at 5% discount in DPL itself. Now they have taken price increase. As you know, they have announced 2 price increases totaling to 2% to 2.5% approximately. Some of them are now almost matched in the luxury category. And in the commodity, the differences are still there. So therefore, the DPL difference has narrowed down. As far as the schemes are concerned, it is still higher. But as I said, stable, not increasing or not doing something disruptive.

Last thing, they were late entrant in Eastern region. So even in East, they have not been able to sort of penetrate -- We were late entrant in East, in the Eastern region in West Bengal and Northeast. Also, you're not seeing any increase in activities, very stable there as well.

Stable there. No major change seen so far.

Final one if I may. Anything you have seen different from Exo after the announcement of...

Things which they have done, one is, of course, some of the price corrections. They used to be at a much higher elevated level in terms of their DPL, et cetera, they have reduced their prices and matched it to the market rates. So that's one thing which is clearly visible. Obviously, that was constraining them in terms of their prices being high in the market. So that is what something which they have adjusted. They have launched one or 2 products in the economy category, which they are trying to penetrate and adding some manpower in the sales team. Beyond that, I think they are a reasonably stable player.

So basically, rational competitive behavior.

That's right. No irrationality is something which is being shown.

The next question is from the line of Anurag Dayal.

So this is Anurag Dayal from PhillipCapital. My question is on the industrial paint category. The growth trend has been mixed, while some of the competitors are doing well in this segment, especially for the protective coating segment, we have not done that well. What is the reason behind it, A? And second, how should we look at the industrial segment growth going forward? Would we return to kind of a double-digit trajectory there in FY'27?

You're right. So automotive, we are okay. We could have done slightly better than what we did. But the growth rates were actually there much more in the cars, not so much in the other categories. We could have registered another 3, 4 percentage, but that's about it. In protective, we could have done better. Our prices are slightly on the higher side, I think. We will have to adjust a little bit and be more competitive. Our EBITDA margin is much higher than competition. We are the leader in this category. We thought that we should be able to maintain that price gap, but we may have to adjust a little bit and then the growth rates can be restored.

So could we expect a double-digit growth kind of next year?

We should be able to do that.

Okay. That's great to know, sir. And secondly, just on the decorative side, we already had 8% volume growth this quarter. So is it safe to assume that you would reach a double-digit kind of 10% in Q4 and maybe maintain a 6% kind of volume-value gap?

Yes, you can think like that.

As there are no further questions, we consider that as the last question for the day. I hand over the call to the management for their closing remarks.

Thank you all for coming, taking time out and reaching here. And best of luck for the rest of the day. Thank you.

Thank you.

Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you all for joining us.